July 10, 2009

Software Company Sues Google For Trademark Infringement

Rosetta Stone, maker of the popular foreign language software, filed a federal trademark suit against Google in Virginia today, alleging that one of the Web giant’s major advertising programs allows companies to confuse consumers.

The suit, filed by Gibson, Dunn & Crutcher partner Terence Ross at the U.S. District Court for the Eastern District of Virginia, is just latest to target Google for its AdWords program, which lets companies buy advertisements that run alongside its search engine results. The ads are triggered by certain keywords, and show up as “sponsored links.”

According to the complaint, since 2004, Google has let companies attach their ads to trademarked keywords they do not own. So a search for Rosetta Stone might bring up the company’s official Web site, as well several paid advertisements for its competitors. Google also allows companies to use those trademarked terms in the headlines of their ads.

Rossetta Stone’s suit accuses Google allowing companies to “free ride” on its brand and of “hijacking” consumers by confusing them into clicking on the wrong sites.

“Google either is misleading or will mislead consumers in innumerable different ways,” the complaint states. “Accordingly, it is impossible for Rosetta Stone to cure this problem merely by pursuing remedies against Google’s advertisers alone.”

Google has been hit with a string of similar lawsuits over its AdWords program. In April, the U.S. Court of Appeals for the 2nd Circuit ruled that one of those suits could go forward after a lower court had dismissed it. The appeals court found that Google was using the trademarks in an act of commerce, giving the trademark owners the right to file a claim.

With that legal issue resolved, Gibson’s Ross said that juries will have to decide whether Google’s practice is likely to confuse consumers.

“There’s not going to be any quick resolution of any of these” suits, he said. “You could get different outcomes from different juries over time.”

Google itself appears to have expected the legal trouble. In its complaint, Rosetta Stone quotes from one the company’s Securities and Exchange Commission filings from 2004, shortly after it adopted its current trademark policy.

“As a result of this change in policy, we may be subject to more trademark infringement lawsuit,” the company stated. “Adverse results in these lawsuits may result in, or even compel, a change in this practice which could result in a loss of revenue for us, which could harm our business.”

According to Ross, however, there seems to be no sign of Google backing down from the practice. He noted that the company started letting trademarked words into headlines, for instance, after the 2nd Circuit’s ruling.